Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ALLOY INC | d8k.htm |
| EX-2.1 - ASSET PURCHASE AGREEMENT - ALLOY INC | dex21.htm |
| EX-99.2 - PRESS RELEASE - ALLOY INC | dex992.htm |
Exhibit 99.1
The following unaudited pro forma consolidated financial statements reflect the sale of FrontLine, giving effect to the pro forma adjustments described in the accompanying notes. The unaudited pro forma consolidated financial statements have been prepared from, and should be read in conjunction with, the historical consolidated financial statements and notes thereto of Alloy, Inc., which are included in Alloy Inc.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2010.
The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred had the disposition been consummated at the dates indicated, nor is it necessarily indicative of the future operating results or financial position of Alloy, Inc.
The unaudited pro forma Consolidated Statements of Operations give effect to the disposition of FrontLine as if it had occurred at the beginning of the periods presented. The unaudited pro forma Consolidated Balance Sheet gives effect to the disposition of FrontLine as if it occurred on February 1, 2009.
ALLOY, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Amounts in thousands, except per share amounts)
| January 31, 2010 | ||||||||||||||||
| Alloy Reported * |
FrontLine | Adjustments Note 1 |
Alloy Pro forma |
|||||||||||||
| ASSETS |
||||||||||||||||
| Current assets: |
||||||||||||||||
| Cash and cash equivalents |
$ | 26,178 | $ | — | $ | 32,850 | (a) | $ | 59,028 | |||||||
| Accounts receivable, net of allowance for doubtful accounts |
30,759 | (3,995 | ) | — | 26,764 | |||||||||||
| Unbilled accounts receivable |
5,989 | — | — | 5,989 | ||||||||||||
| Inventory |
3,478 | — | — | 3,478 | ||||||||||||
| Other current assets |
5,710 | (103 | ) | — | 5,607 | |||||||||||
| Total current assets |
72,114 | (4,098 | ) | 32,850 | 100,866 | |||||||||||
| Fixed assets, net |
22,119 | (2,765 | ) | — | 19,354 | |||||||||||
| Goodwill |
55,297 | (10,212 | ) | — | 45,085 | |||||||||||
| Intangible assets, net |
6,951 | (175 | ) | — | 6,776 | |||||||||||
| Other assets |
1,657 | — | — | 1,657 | ||||||||||||
| Total assets |
$ | 158,138 | $ | (17,250 | ) | $ | 32,850 | $ | 173,738 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||
| Current liabilities: |
||||||||||||||||
| Accounts payable |
$ | 11,036 | $ | (150 | ) | $ | — | $ | 10,886 | |||||||
| Deferred revenue |
11,050 | (745 | ) | — | 10,305 | |||||||||||
| Accrued expenses and other current liabilities |
26,858 | (9,203 | ) | 1,108 | 18,763 | |||||||||||
| Total current liabilities |
48,944 | (10,098 | ) | 1,108 | (b) | 39,954 | ||||||||||
| Deferred tax liability |
2,668 | — | (175 | )(c) | 2,493 | |||||||||||
| Other long-term liabilities |
3,112 | — | — | 3,112 | ||||||||||||
| Total liabilities |
54,724 | (10,098 | ) | 933 | 45,559 | |||||||||||
| Shareholders’ equity: |
||||||||||||||||
| Common Stock, par value $0.01 per share: authorized 200,000 shares; |
165 | — | — | 165 | ||||||||||||
| Additional paid-in capital |
454,896 | — | — | 454,896 | ||||||||||||
| Accumulated deficit |
(321,546 | ) | — | 24,765 | (d) | (296,781 | ) | |||||||||
| 133,515 | — | 24,765 | 158,280 | |||||||||||||
| Less treasury stock, at cost |
(30,101 | ) | — | — | (30,101 | ) | ||||||||||
| Total shareholders’ equity |
103,414 | — | 24,765 | 128,179 | ||||||||||||
| Total liabilities and shareholders’ equity |
$ | 158,138 | $ | (10,098 | ) | $ | 25,698 | $ | 173,738 | |||||||
| * | As reported from the Company’s Form 10K for the year ended January 31, 2010 |
Note 1—The unaudited pro forma Consolidated Balance Sheet has been prepared to reflect the net proceeds from the sale of the operating assets of FrontLine for net cash proceeds of approximately $32.9 million. Pro forma adjustments are made to reflect:
| (a) | The net proceeds from the sale of FrontLine. |
| (b) | The estimated accrued income tax due as result of the sale of FrontLine. |
| (c) | Reversal of a deferred tax liability recorded in conjunction with the original acquisition of FrontLine by Alloy, which occurred in April 2007. The deferred tax liability represents differences between Alloy’s book basis in FrontLine and its tax basis in FrontLine at January 31, 2010. |
| (d) | Net gain on sale, net of applicable taxes. |
ALLOY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(Amounts in thousands, except per share data)
| Fiscal Year Ended January 31, 2010 | ||||||||||||
| Alloy | Alloy | |||||||||||
| Reported * | FrontLine | Pro forma | ||||||||||
| Revenues: |
||||||||||||
| Services revenue |
$ | 167,577 | $ | 21,375 | $ | 146,202 | ||||||
| Product revenue |
37,521 | — | 37,521 | |||||||||
| Total Revenue |
205,098 | 21,375 | 183,723 | |||||||||
| Cost of Goods Sold: |
||||||||||||
| Cost of goods sold - services |
76,881 | 11,254 | 65,627 | |||||||||
| Cost of goods sold - product |
10,541 | — | 10,541 | |||||||||
| Total costs of goods sold |
87,422 | 11,254 | 76,168 | |||||||||
| Expenses: |
||||||||||||
| Operating |
86,897 | 5,693 | 81,204 | |||||||||
| General and administrative |
20,872 | — | 20,872 | |||||||||
| Depreciation and amortization** |
7,292 | 1,135 | 6,157 | |||||||||
| Special charges |
4,994 | — | 4,994 | |||||||||
| Total expenses |
120,055 | 6,828 | 113,227 | |||||||||
| Operating income (loss) |
(2,379 | ) | 3,293 | (5,672 | ) | |||||||
| Interest expense |
(16 | ) | — | (16 | ) | |||||||
| Interest income |
31 | — | 31 | |||||||||
| Other items, net |
(9 | ) | — | (9 | ) | |||||||
| Income (loss) before taxes |
(2,373 | ) | 3,293 | (5,666 | ) | |||||||
| Income tax expense |
(2,510 | ) | (451 | ) | (2,059 | ) | ||||||
| Net income (loss) |
$ | (4,883 | ) | $ | 2,842 | $ | (7,725 | ) | ||||
| Net earnings (loss) per basic share |
$ | (0.42 | ) | $ | 0.25 | $ | (0.67 | ) | ||||
| Net earnings (loss) per diluted share |
$ | (0.42 | ) | $ | 0.25 | $ | (0.67 | ) | ||||
| * | As reported from the Company’s Form 10K for the year ended January 31, 2010 |
| ** | Includes amortization of intangibles of $2,867 for the year ended January 31, 2010. |
Note 1—The above Consolidated Statement of Operations gives effect to the following pro forma adjustments necessary to reflect the sale of the operating assets of FrontLine as outlined in Note 1 of the pro forma Consolidated Balance Sheet.
The pro forma unaudited Consolidated Statements of Operations eliminate the results of operations of FrontLine for the fiscal year ended January 31, 2010.
A non recurring net gain of $24.8 million has not been included in the pro forma Consolidated Statements of Operations.
ALLOY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(Amounts in thousands, except per share data)
| Fiscal Year Ended January 31, 2009 | ||||||||||||
| Alloy | Alloy | |||||||||||
| Reported * | FrontLine | Pro forma | ||||||||||
| Revenues: |
||||||||||||
| Services revenue |
$ | 176,350 | $ | 17,090 | $ | 159,260 | ||||||
| Product revenue |
40,576 | — | 40,576 | |||||||||
| Total Revenue |
216,926 | 17,090 | 199,836 | |||||||||
| Cost of Goods Sold: |
||||||||||||
| Cost of goods sold - services |
84,192 | 9,713 | 74,479 | |||||||||
| Cost of goods sold - product |
11,469 | — | 11,469 | |||||||||
| Total costs of goods sold |
95,661 | 9,713 | 85,948 | |||||||||
| Expenses: |
||||||||||||
| Operating |
90,318 | 4,586 | 85,732 | |||||||||
| General and administrative |
19,254 | — | 19,254 | |||||||||
| Depreciation and amortization** |
6,429 | 1,073 | 5,356 | |||||||||
| Special charges |
288 | — | 288 | |||||||||
| Total expenses |
116,289 | 5,659 | 110,630 | |||||||||
| Gain on sale of operating assets |
5,800 | — | 5,800 | |||||||||
| Operating income |
10,776 | 1,718 | 9,058 | |||||||||
| Interest expense |
(156 | ) | — | (156 | ) | |||||||
| Interest income |
317 | — | 317 | |||||||||
| Other items, net |
(18 | ) | — | (18 | ) | |||||||
| Income before taxes |
10,919 | 1,718 | 9,201 | |||||||||
| Income tax expense |
(484 | ) | (76 | ) | (408 | ) | ||||||
| Net income |
$ | 10,435 | $ | 1,642 | $ | 8,793 | ||||||
| Net earnings per basic share |
$ | 0.78 | $ | 0.12 | $ | 0.66 | ||||||
| Net earnings per diluted share |
$ | 0.78 | $ | 0.12 | $ | 0.66 | ||||||
| * | As reported from the Company’s Form 10K for the year ended January 31, 2009 |
| ** | Includes amortization of intangibles of $2,073 for the year ended January 31, 2009. |
Note 1—The above Consolidated Statement of Operations gives effect to the following pro forma adjustments necessary to reflect the sale of the operating assets of FrontLine as outlined in Note 1 of the pro forma Consolidated Balance Sheet.
The pro forma unaudited Consolidated Statements of Operations eliminate the results of operations of FrontLine for the fiscal year ended January 31, 2009.
A non recurring net gain of $24.8 million has not been included in the pro forma Consolidated Statements of Operations.
ALLOY, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(Amounts in thousands, except per share data)
| Fiscal Year Ended January 31, 2008 | ||||||||||||
| Alloy Reported * |
FrontLine | Alloy Pro forma |
||||||||||
| Revenues: |
||||||||||||
| Services revenue |
$ | 159,129 | $ | 11,127 | $ | 148,002 | ||||||
| Product revenue |
39,967 | — | 39,967 | |||||||||
| Total Revenue |
199,096 | 11,127 | 187,969 | |||||||||
| Cost of Goods Sold: |
||||||||||||
| Cost of goods sold - services |
84,268 | 6,348 | 77,920 | |||||||||
| Cost of goods sold - product |
11,679 | — | 11,679 | |||||||||
| Total costs of goods sold |
95,947 | 6,348 | 89,599 | |||||||||
| Expenses: |
||||||||||||
| Operating |
78,609 | 3,074 | 75,535 | |||||||||
| General and administrative |
17,897 | 1 | 17,896 | |||||||||
| Depreciation and amortization** |
5,080 | 777 | 4,303 | |||||||||
| Special charges |
71,628 | — | 71,628 | |||||||||
| Total expenses |
173,214 | 3,852 | 169,362 | |||||||||
| Gain on sale of operating assets |
— | — | — | |||||||||
| Operating income (loss) |
(70,065 | ) | 927 | (70,992 | ) | |||||||
| Interest expense |
(154 | ) | — | (154 | ) | |||||||
| Interest income |
1,122 | — | 1,122 | |||||||||
| Other items, net |
(494 | ) | — | (494 | ) | |||||||
| Income (loss) before taxes |
(69,591 | ) | 927 | (70,518 | ) | |||||||
| Income tax expense |
(481 | ) | (59 | ) | (422 | ) | ||||||
| Income (loss) before extraordinary gain |
(70,072 | ) | 868 | (70,940 | ) | |||||||
| Extraordinary gain (net of tax) |
5,680 | — | 5,680 | |||||||||
| Net income (loss) |
$ | (64,392 | ) | $ | 868 | $ | (70,940 | ) | ||||
| Net earnings (loss) per basic share: |
||||||||||||
| Income (loss) before extraordinary item |
$ | (5.24 | ) | $ | 0.06 | $ | (5.30 | ) | ||||
| Extraordinary gain |
$ | 0.43 | $ | — | $ | 0.43 | ||||||
| Net earnings (loss) per basic share |
$ | (4.82 | ) | $ | 0.06 | $ | (4.88 | ) | ||||
| Net earnings (loss) per diluted share: |
||||||||||||
| Income (loss) before extraordinary item |
$ | (5.24 | ) | $ | 0.06 | $ | (5.30 | ) | ||||
| Extraordinary gain |
$ | 0.43 | $ | — | $ | 0.43 | ||||||
| Net earnings (loss) per diluted share |
$ | (4.82 | ) | $ | 0.06 | $ | (4.88 | ) | ||||
| * | As reported from the Company’s Form 10K for the year ended January 31, 2008 |
| ** | Includes amortization of intangibles of $1,739 for the year ended January 31, 2008. |
Note 1—The above Consolidated Statement of Operations gives effect to the following pro forma adjustments necessary to reflect the sale of the operating assets of FrontLine as outlined in Note 1 of the pro forma Consolidated Balance Sheet.
The pro forma unaudited Consolidated Statements of Operations eliminate the results of operations of FrontLine for the fiscal year ended January 31, 2008.
A non recurring net gain of $24.8 million has not been included in the pro forma Consolidated Statements of Operations.